Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 156067 August 11, 2004

MADRIGAL TRANSPORT, INC., petitioner,

vs.
LAPANDAY HOLDINGS CORPORATION; MACONDRAY AND COMPANY, INC.; and LUIS P. LORENZO
JR., respondents.

DECISION

PANGANIBAN, J.:

The special civil action for certiorari and appeal are two different remedies that are mutually exclusive; they are not
alternative or successive. Where appeal is available, certiorari will not prosper, even if the ground therefor is grave
abuse of discretion. Basic is the rule that certiorari is not a substitute for the lapsed remedy of appeal.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the February 28, 2002 Decision2and
the November 5, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 54861. The challenged Decision
disposed as follows:

"WHEREFORE, in consideration of the foregoing premises, private respondents Lapanday and Lorenzo, Jr.’s
Motion for Reconsideration dated 10 February 2000 is GRANTED. Accordingly, the Resolution dated 10 January
2000 is RECONSIDERED and SET ASIDE, thereby dismissing the Petition for Certiorari dated 10 September
1999."4

The assailed Resolution denied reconsideration.

The Facts

The pertinent facts are undisputed. On February 9, 1998, Petitioner Madrigal Transport, Inc. ("Madrigal") filed a
Petition for Voluntary Insolvency before the Regional Trial Court (RTC) of Manila, Branch 49. 5 Subsequently, on
February 21, 1998, petitioner filed a Complaint for damages against Respondents Lapanday Holdings Corporation
("Lapanday"), Macondray and Company, Inc. ("Macondray"), and Luis P. Lorenzo Jr. before the RTC of Manila, Branch
36.6

In the latter action, Madrigal alleged (1) that it had entered into a joint venture agreement with Lapanday for the
primary purpose of operating vessels to service the shipping requirements of Del Monte Philippines, Inc.; 7 (2) that it
had done so on the strength of the representations of Lorenzo, in his capacity either as chairman of the board or as
president of Del Monte, Lapanday and Macondray; (3) that Macondray had thereafter been appointed -- allegedly
upon the insistence of Lapanday -- as broker, for the purpose of securing charter hire contracts from Del Monte; (4)
that pursuant to the joint venture agreement, Madrigal had purchased a vessel by obtaining a P10,000,000 bank loan;
and (5) that contrary to their representations and guarantees and despite demands, Lapanday and Lorenzo had
allegedly been unable to deliver those Del Monte charter hire contracts.8

On February 23, 1998, the insolvency court (RTC Branch 49) declared petitioner insolvent. 9 On March 30, 1998 and
April 6, 1998, Respondents Lapanday, Lorenzo and Macondray filed their respective Motions to Dismiss the case
pending before the RTC Branch 36.10
On December 16, 1998, Branch 36 granted the Motion, for failure of the Complaint to state a cause of action. Applying
Sections 32 and 33 of the Insolvency Law,11 the trial court opined that upon the filing by Madrigal of a Petition for
Voluntary Insolvency, the latter lost the right to institute the Complaint for Damages. The RTC ruled that the exclusive
right to prosecute the actions belonged to the court-appointed assignee.12

On January 26, 1999, petitioner filed a Motion for Reconsideration,13 which was later denied on July 26,
1999.14Subsequently, petitioner filed a Petition for Certiorari with the Court of Appeals, seeking to set aside the
December 16, 1998 and the July 26, 1999 Orders of the trial court.15 On September 29, 1999, the CA issued a
Resolution requiring petitioner to explain why its Petition should not be dismissed outright, on the ground that the
questioned Orders should have been elevated by ordinary appeal.16

On January 10, 2000, the appellate court ruled that since the main issue in the instant case was purely legal, the
Petition could be treated as one for review as an exception to the general rule that certiorari was not proper when
appeal was available.17 Respondents Lapanday and Lorenzo challenged this ruling through a Motion for
Reconsideration dated February 10, 2000.18 The CA heard the Motion for Reconsideration in oral arguments on April 7,
2000.19

Ruling of the Court of Appeals

On February 28, 2002, the appellate court issued the assailed Decision granting Respondents Lapanday and Lorenzo’s
Motion for Reconsideration and dismissing Madrigal’s Petition for Certiorari. The CA opined that an order granting a
motion to dismiss was final and thus the proper subject of an appeal, not certiorari.20

Furthermore, even if the Petition could be treated as an appeal, it would still have to be dismissed for lack of
jurisdiction, according to the CA.21 The appellate court held that the issues raised by petitioner involved pure
questions of law that should be brought to the Supreme Court, pursuant to Section 2 of Rule 50 and Section 2(c) of
Rule 41 of the Rules of Court.22

Hence, this Petition.23

The Issues

In its Statement of Issues, petitioner contends:

"I

The Honorable Court of Appeals committed egregious error by ruling that the order of the lower court which
granted private respondents’ Motions to Dismiss are not proper subjects of a Petition for Certiorari under Rule
65.

‘A. Section 5, Rule 16 does not apply in the present case since the grounds for dismissal [were]
petitioner’s purported lack of capacity to sue and its failure to state a cause of action against private
respondents, and not any of the three (3) grounds provided under said provision, namely, res
judicata, extinction of the claim, and Statute of Frauds.

‘B. Section 1 of Rule 41, which is the applicable provision in petitioner’s case, expressly proscribes the
taking of an appeal from an order denying a motion for reconsideration or one which dismisses an
action without prejudice, instead, the proper remedy is a special civil action under Rule 65.

‘C. A petition for certiorari under Rule 65 was correctly resorted to by petitioner from the dismissal
order of the lower court, which had clearly acted with grave abuse of discretion amounting to lack of
jurisdiction.

"II

The Honorable Court of Appeals committed serious error in ruling that it had no jurisdiction to entertain the
Petition for Certiorari filed by petitioner before it.

‘A. Section 2, Rule 50 nor Section 2(c) and Section 2(c), Rule 41 find no application in the present
case, since said rule contemplates of a case where an appeal is the proper remedy, and not where the
 appropriate remedy is a petition for certiorari where questions of facts and laws may be reviewed by
the court a quo.

‘B. The court a quo erroneously concluded that it has no jurisdiction over the subject matter of the
petition based on the wrong premise that an appeal from the lower court’s dismissal order is the
proper remedy by applying Section 2, Rule 50 and Section 2(c), Rule 41 of the Rules of Court." 24

The Court’s Ruling

The Petition is unmeritorious.

First Issue:
Remedy Against Dismissal of Complaint

The resolution of this case hinges on the proper remedy: an appeal or a petition for certiorari. Petitioner claims that it
correctly questioned the trial court’s Order through its Petition for Certiorari. Respondents insist that an ordinary
appeal was the proper remedy. We agree with respondents.

Appeal

Under Rule 41, Rules of Court, an appeal may be taken from a judgment or final order that completely disposes of the
case, or of a particular matter therein when declared by the Rules of Court to be appealable.25 The manner of
appealing an RTC judgment or final order is also provided in Rule 41 as follows:

Section 2. Modes of appeal. —

(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the
exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the
judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on
appeal shall be required except in special proceedings and other cases of multiple or separate appeals where
the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in
the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved, the appeal shall be
to the Supreme Court by petition for review on certiorari in accordance with Rule 45.26

An order or a judgment is deemed final when it finally disposes of a pending action, so that nothing more can be done
with it in the trial court. In other words, the order or judgment ends the litigation in the lower court. Au contraire, an
interlocutory order does not dispose of the case completely, but leaves something to be done as regards the merits of
the latter.27

Petition for Certiorari

A petition for certiorari is governed by Rule 65, which reads:

Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting
to lack or excess of its or his jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third paragraph of Section 3, Rule 46.28
A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction. The writ cannot be used for any other purpose, as its function is limited to
keeping the inferior court within the bounds of its jurisdiction.29

For certiorari to prosper, the following requisites must concur: (1) the writ is directed against a tribunal, a board or
any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in
excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no
appeal or any plain, speedy and adequate remedy in the ordinary course of law. 30

"Without jurisdiction" means that the court acted with absolute lack of authority.31 There is "excess of jurisdiction"
when the court transcends its power or acts without any statutory authority.32 "Grave abuse of discretion" implies
such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of jurisdiction; in other
words, power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility;
and such exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to
perform the duty enjoined or to act at all in contemplation of law.33

Appeal and Certiorari Distinguished

Between an appeal and a petition for certiorari, there are substantial distinctions which shall be explained below.

As to the Purpose. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of
judgment.34 In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light:

"When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the
jurisdiction being exercised when the error is committed. If it did, every error committed by a court would
deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot be allowed.
The administration of justice would not survive such a rule. Consequently, an error of judgment that the court
may commit in the exercise of its jurisdiction is not correct[a]ble through the original civil action
of certiorari."35

The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the purpose of
reviewing the intrinsic correctness of a judgment of the lower court -- on the basis either of the law or the facts of the
case, or of the wisdom or legal soundness of the decision.36 Even if the findings of the court are incorrect, as long as it
has jurisdiction over the case, such correction is normally beyond the province of certiorari.37 Where the error is not
one of jurisdiction, but of an error of law or fact -- a mistake of judgment -- appeal is the remedy. 38

As to the Manner of Filing. Over an appeal, the CA exercises its appellate jurisdiction and power of review. Over
a certiorari, the higher court uses its original jurisdiction in accordance with its power of control and supervision over
the proceedings of lower courts. 39 An appeal is thus a continuation of the original suit, while a petition for certiorari is
an original and independent action that was not part of the trial that had resulted in the rendition of the judgment or
order complained of.40 The parties to an appeal are the original parties to the action. In contrast, the parties to a
petition for certiorari are the aggrieved party (who thereby becomes the petitioner) against the lower court or quasi-
judicial agency, and the prevailing parties (the public and the private respondents, respectively). 41

As to the Subject Matter. Only judgments or final orders and those that the Rules of Court so declare are
appealable.42 Since the issue is jurisdiction, an original action for certiorari may be directed against an interlocutory
order of the lower court prior to an appeal from the judgment; or where there is no appeal or any plain, speedy or
adequate remedy.43

As to the Period of Filing. Ordinary appeals should be filed within fifteen days from the notice of judgment or final
order appealed from.44 Where a record on appeal is required, the appellant must file a notice of appeal and a record
on appeal within thirty days from the said notice of judgment or final order.45 A petition for review should be filed and
served within fifteen days from the notice of denial of the decision, or of the petitioner’s timely filed motion for new
trial or motion for reconsideration.46 In an appeal by certiorari, the petition should be filed also within fifteen days
from the notice of judgment or final order, or of the denial of the petitioner’s motion for new trial or motion for
reconsideration.47

On the other hand, a petition for certiorari should be filed not later than sixty days from the notice of judgment, order,
or resolution.48 If a motion for new trial or motion for reconsideration was timely filed, the period shall be counted
from the denial of the motion.49
As to the Need for a Motion for Reconsideration. A motion for reconsideration is generally required prior to the
filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged errors. Note also
that this motion is a plain and adequate remedy expressly available under the law.50 Such motion is not required
before appealing a judgment or final order.51

Certiorari Not the Proper Remedy if Appeal Is Available

Where appeal is available to the aggrieved party, the action for certiorari will not be entertained. Remedies of appeal
(including petitions for review) and certiorari are mutually exclusive, not alternative or
successive.52Hence, certiorari is not and cannot be a substitute for an appeal, especially if one’s own negligence or
error in one’s choice of remedy occasioned such loss or lapse.53 One of the requisites of certiorari is that there be no
available appeal or any plain, speedy and adequate remedy.54 Where an appeal is available, certiorari will not prosper,
even if the ground therefor is grave abuse of discretion.

Second Issue:
CA Jurisdiction

Petitioner was ascribing errors of judgment, not jurisdiction, in its Petition for Certiorari filed with the Court of
Appeals. The issue raised there was the trial court’s alleged error in dismissing the Complaint for lack of cause of
action. Petitioner argues that it could still institute the Complaint, even if it had filed a Petition for Insolvency
earlier.55 As petitioner was challenging the trial court’s interpretation of the law -- posing a question of law -- the issue
involved an error of judgment, not of jurisdiction. An error of judgment committed by a court in the exercise of its
legitimate jurisdiction is not necessarily equivalent to "grave abuse of discretion."56

The instant case falls squarely with Barangay Blue Ridge "A" of QC v. Court of Appeals.57 In that case, the trial court
granted the Motion to Dismiss on the ground of failure to state a cause of action. After the Motion for Reconsideration
was denied, petitioner filed a Petition for Certiorari with the CA. The appellate court denied the Petition on the ground
that the proper remedy was appeal. Holding that an error of judgment should be reviewed through an ordinary
appeal, this Court upheld the CA.

The Dismissal -- a Final Order

An order of dismissal, whether correct or not, is a final order.58 It is not interlocutory because the proceedings are
terminated; it leaves nothing more to be done by the lower court. Therefore the remedy of the plaintiff is to appeal
the order.59

Petitioner avers that Section 5 of Rule 1660 bars the filing of an appeal when the dismissal is based on lack of cause of
action. It adds that Section 5 limits the remedy of appeal only to dismissals grounded on prior judgments or on the
statute of limitations, or to claims that have been extinguished or are unenforceable. We find this interpretation
absurd.

The provision is clear. Dismissals on the aforesaid grounds constitute res judicata. However, such dismissals are still
subject to a timely appeal. For those based on other grounds, the complaint can be refiled. Section 5, therefore,
confirms that an appeal is the remedy for the dismissal of an action.

Citing Sections 1(a) and 1(h), Rule 41,61 petitioner further claims that it was prohibited from filing an appeal. Section
1(a) of the said Rule prohibits the filing of an appeal from an order denying a motion for reconsideration, because the
remedy is to appeal the main decision as petitioner could have done. In fact, under Section 9, Rule 37, the remedy
against an order denying a motion for reconsideration is to appeal the judgment or final order. Section 1(h) does not
apply, because the trial court’s Order did not dismiss the action without prejudice. 62

Exception to the Rule Not Established by Petitioner

We are not unaware of instances when this Court has granted certiorari despite the availability of appeal.63Where the
exigencies of the case are such that the ordinary methods of appeal may not prove adequate -- either in point of
promptness or completeness, so that a partial if not a total failure of justice could result -- a writ of certiorari may still
be issued.64 Petitioner cites some of these exceptions to justify the remedy it has undertaken with the appellate
court,65 but these are not applicable to the present factual milieu.

Even assuming that the Order of the RTC was erroneous, its error did not constitute grave abuse of discretion.
Petitioner asserts that the trial court should not have dismissed the Complaint or should have at least allowed the
substitution of the assignee in petitioner’s stead.66 These alleged errors of judgment, however, do not constitute a
despotic, capricious, or whimsical exercise of power. On the contrary, petitioner availed of certiorari because the 15-
day period within which to file an appeal had already lapsed. Basic is the rule that certiorari is not a substitute for the
lapsed remedy of appeal.

As previously stressed, appeal -- not certiorari -- was the correct remedy to elevate the RTC’s Order granting the
Motion to Dismiss. The appeal, which would have involved a pure question of law, should have been filed with the
Supreme Court pursuant to Section 2 (c) of Rule 41 and Section 2 of Rule 50,67 Rules of Court.

WHEREFORE, this Petition is DENIED, and the challenged Decision and Resolution AFFIRMED.

Costs against petitioner.

SO ORDERED.

Corona and Carpio-Morales, JJ., concur.

Sandoval-Gutierrez, J., on leave.